Nonalcoholic steatohepatitis (NASH) is a clinicopathological entity that is being recognized more frequently in recent years. It is characterized by histologic changes that are similar to alcoholic hepatitis, but in the absence of excessive alcohol consumption. It is typically associated with type 2 diabetes mellitus, obesity and dyslipidemia and insulin resistance. It may progress and cause severe hepatic fibrosis and cirrhosis in significant numbers of patients. Currently, there is no effective therapy for this condition. In this pilot, open label study, we propose to treat 30 patients with nonalcoholic hepatitis with pioglitazone for 48 weeks. Pioglitazone has been shown to improve insulin sensitivity, the possible underlying mechanism of nonalcoholic steatohepatitis. Pioglitazone is an antidiabetic drug that belongs to thiazolidinedione group. The mechanism of action is thought to be mediated by activation of peroxisome proliferator-activated receptors-gamma (PPAR-gamma). After an initial evaluation of insulin sensitivity, fat distribution and liver biopsy, patients will receive 30 mg of pioglitazone, orally for 48 weeks. Patients will be monitored at regular intervals for symptoms of liver disease, side effects of pioglitazone, serum biochemical and metabolic indices. At 48 weeks, patients will have a repeat medical evaluation and liver biopsy. Pre and post treatment liver histology, fat distribution and insulin sensitivity will be compared. The primary end point of successful therapy will be improvement in hepatic histology as determined by reduction of at least three points in NASH activity score. Secondary end points will be improvement in insulin sensitivity, reduction in visceral fat, liver volume and liver biochemistry.